Saturday, July 14, 2012

Food Security and Public Distribution System

“Food security refers to a situation that exists when all people at all times have physical, social and economic access to sufficient, safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life,” says an FAO report ‘State of Food Insecurity in the World, 2001’.
It is now well recognized that the availability of food grains is necessary but not a sufficient condition to ensure food security to the poor. It is also necessary that the poor have sufficient means to purchase food. The capacity of the poor to purchase food can be ensured in two ways – by raising the incomes or supplying food grains at subsidized prices. While employment generation programs attempt the first solution, the PDS is the mechanism for the second option.
There are several ways in which food security can be improved. The strategies constitute several policies. India's strategies in this regard comprise economic growth, direct anti-poverty programs, which include wage-employed and self-employed targeted programs, public distribution system (PDS) nutrition-based programs and provision of health facilities.
India has a large program of public food distribution, mainly food grains, through a network of Fair Price Shops (FPS), both in rural and urban areas. The program has evolved with the twin objective of providing incentive prices to the farmer for a sustained supply of food grain and subsidizing its consumption. Until the seventies the focus of food distribution program was urban and the food deficit areas. The welfare focus of the program assumed importance during the eighties and coverage extended in rural areas, first in the south Indian states and later all over India. However, due to the mounting costs of subsidy, targeting was more focused during the nineties, first, with the revamped public distribution system in 1997. The program covered poor households as the target group, generally, and tribal and drought prone areas, universally.  
 The Targeted Public Distribution System (TPDS) was introduced in June, 1997. It envisaged that the Below Poverty Line (BPL) population would be identified in every State and every BPL family would be entitled to a certain quantity of food grains at specially subsidized prices. While BPL population were offered food grains at half the economic cost, the APL, who were not to have a fixed entitlement to food grains, were supplied grains at their economic cost. Thus, TPDS intends to target the subsidized provision of food grains to ‘poor in all areas’ unlike RPDS, which laid stress on ‘all in poor areas’.

Issues with Public Distribution System

1.      The most important issue related to the TPDS is identification and definition of poor. The poverty estimates of various institutions and organization differ remarkably. A slight change in the identification criteria of the poverty line can have huge implication on a large number of families. According to the critics the definition of poor in India has severe limitations and the official numbers are abhorrently underestimated by the government agencies under the pressure of ballooning food subsidies.
2.      The second issue after identification and definition of poor is that of proper targeting. In many states the cases of fraudulent BPL ration cards are rampant. As a result the “genuine poor” are unable to get benefits of this system. Several empirical studies, based on PDS purchases, have shown that the poor were not benefiting much from the PDS. In a study on the effectiveness of the PDS in reaching the poor, Parikh (1994) says that 'the cost effectiveness of reaching the poorest 20 per cent households through PDS cereals is very small'. For every rupee spent, less than 22 paisa reach the poor in most states
3.      The large scale diversion and black marketing of PDS food grain is also a pertinent issue that this system is facing.
4.      The quality of the food grain supplied through the PDS is also inferior in quality and low in nutritional value. Thus even in a very few pockets where the leakages are absent the malnutrition among the vulnerable section of society is not arrested.
5.      In the PDS large quantities of grains are procured from one part of the country to the other, stored in warehouses and moved to other parts. There are high storage and transportation losses. Also the existing centralized system is a major hurdle in ensuring availability in various remote pockets.
6.      The availability of cheap rice and wheat at PDS outlets has dissuaded many a rural households from trying food that is grown locally out of the environmental and socio-economic condition in a given area.

Measures for strengthening the Public Distribution System

1.      The proportion of population with food insecurity should be identified with Planning Commission’s poverty ratio. The Planning Commission should make appropriate adjustments in the method of BPL identification that would enable the States to limit the size of the target group in the neighborhood of its own estimates of people with food insecurity
2.      Families, who do not have a secure source of regular income, should be included in the BPL list, irrespective of their income. This would benefit a large majority of the poor, particularly, those with economic insecurity. The Planning Commission in its study conducted between 2002 to 2005 found that many daily-wage earning families have been left out of BPL category because their current income levels were above the Planning Commission’s Poverty Line.
3.      Since the BPL identification survey is critical to the success of TPDS, it is appropriate that this be carried out with the assistance of reputed agencies such as the NSSO and State level research /survey institutions. The database should be then computerized for effective monitoring and regular updating.
4.      A major cause of diversion of food grain is non-availability of food grains, as per allocation, at FCI based depots or State Agency's distribution centers. Hence, in FCI based depot (which is generally present in each district) six months' stock, as per allotment, should remain. At present, it has been instructed that stocks for three months should be kept, but in many districts three months' stocks are not present. If there is sufficient availability of stocks, on one hand food grain will be made available, as per allotment, and on the other hand, diversion will be checked and food security will be strengthened.
5.      The involvement of local bodies in overseeing the functioning of PDS is, generally, nominal/non-existent in most states. A committee should be formed among members of each Municipality/Gram Panchayat, which should be responsible for effective functioning of Fair Price Shops.
6.      Composition of food grains offered, through PDS, in different States should give due weight ages to local preferences, in terms of cereals and their varieties, wherever feasible. Various studies have revealed that variations in such preferences, significantly, affected their decision to buy food grains from the PDS.
7.      A large majority of the BPL cardholders do not lift or lift only part of the ration quota during the harvest and sowing seasons in rural areas, as many of them receive wage payment in kind and also because market prices during harvest season are low. This seasonal pattern varies across states. Thus, it is necessary to accommodate such lifting pattern into the delivery schedule of PDS to minimize leakage and diversion.
Two major reasons for diversion of food grains are, (a) the PDS outlets are run by individuals and, (b) they are unviable. Regarding (a), it is proposed that the retail PDS outlets be handed over to cooperatives or institutions like Mahila Nagrik Banks, Regional Rural Banks, etc. These organizations will not be solely dependent on PDS for their existence, as is the case with individuals and even in many cases ‘Self Help Groups’ and ‘Consumer Federations’. Such organizations would be able to cross-subsidize the PDS operations through other profitable operations

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